UNITED STATES v. FIRESTONE TIRE & RUBBER CO.

August 15, 1978

UNITED STATES of America, Petitioner,
v.
The FIRESTONE TIRE AND RUBBER COMPANY, Respondent

The opinion of the court was delivered by: FLANNERY

MEMORANDUM OPINION

This matter comes before the court on the petition of the United States to enforce a "special order" issued by the National Highway Traffic Safety Administration, a division of the Department of Transportation, requiring the Firestone Tire and Rubber Co. to answer certain interrogatories and produce certain documents relevant to the Administration's (hereinafter NHTSA) investigation into alleged defects in steel-belted radial tires manufactured by Firestone. NHTSA is empowered to issue such "special orders", which are akin to administrative subpoenas, pursuant to 15 U.S.C. § 1401(c) and 49 C.F.R. part 510 as amended by 42 Fed.Reg. 64628 (Dec. 27, 1977). Apparently, since December, 1977, NHTSA has been attempting to secure information from Firestone relevant to this investigation. NHTSA sent Firestone an information request with a 20-day response deadline on December 20, 1977. After Firestone indicated that it would take longer than 20 days to compile the requested information, a short extension was granted. Firestone filed several partial responses to the information request through the early part of 1978, but continued to indicate that even as late as March, 1978, there was still insufficient time to comply with the request. Finally, on April 26, 1978, four months after the original information request was filed, Firestone filed its "final" responses. However, it appears that these "final" responses failed to provide information responsive to certain of the requests, and that no justification was offered for these omissions. Specifically, Firestone failed to provide: (1) 1975 consumer complaint letters (Request 3); (2) warranty adjustment reports (Request 4); (3) results of Firestone investigations into accidents purportedly leading to accidents due to tire failure (Request 7); (4) factual bases for lawsuits; and (5) various documents requested in Requests 10 and 11. It was in light of these failures to respond that NHTSA issued its special order, the provisions of which are detailed, Infra. Firestone's failure to comply with the special order has led NHTSA to file this enforcement action. On the eve of the hearing on this enforcement petition, Firestone filed, along with its response to the petition, a motion to dismiss the petition or in the alternative to transfer this proceeding to the Northern District of Ohio. The government had no opportunity to respond to this motion before the hearing, but attempted to argue the motion nonetheless. Since the hearing, pursuant to this court's request, the parties have filed supplemental memoranda regarding this motion. This entire matter may now be decided, and the court will discuss the procedural and jurisdictional points raised by the motion to dismiss or to transfer before proceeding to the merits of this enforcement action.

I. Respondent's Motion to Dismiss or to Transfer.

Respondent's motion contains five arguments. First, Firestone argues that this petition should be dismissed since this District is not the proper venue within the meaning of 15 U.S.C. § 1401(c)(4). Second, Firestone asserts that if dismissal is not warranted by the impropriety of venue, then this case should be transferred to the Northern District of Ohio for the convenience of witnesses and because another proceeding involving Firestone and NHTSA is currently pending in that district. Third, Firestone contends that even if venue is proper, this matter should still be dismissed since NHTSA lacks extraterritorial subpoena powers, and thus the service of the subpoena on Firestone in Ohio was invalid. Fourth, Firestone asserts that this court lacks personal jurisdiction over respondent. Finally, Firestone argues that NHTSA failed to establish an administrative review procedure before seeking court enforcement of the special order, and that thereby NHTSA has in some way failed to exhaust administrative remedies. Each of these arguments will be analyzed separately.

A. Venue: 15 U.S.C. § 1401(c)(4).

The National Traffic and Motor Vehicle Safety Act, as amended, 15 U.S.C. § 1401(c)(4) (1976) provides for a specific venue for enforcement proceedings of this type:

Any of the district courts of the United States within the jurisdiction of which an inquiry is carried on may, in the case of contumacy or refusal to obey a subpoena or order of the Secretary or such officer or employee issued under paragraph (1) or paragraph (3) of this subsection, issue an order requiring compliance therewith; and any failure to obey such order of the court may be punished by such court as a contempt thereof.

Firestone asserts that this is not a district "within the jurisdiction of which an inquiry is carried on," and that therefore dismissal is warranted. In support of this contention, Firestone states that its corporate headquarters are in Akron, Ohio, and that most of the information required is also located in Akron, Ohio. Furthermore, Firestone contends that the Northern District of Ohio is already the site of pending litigation between Firestone and NHTSA and that therefore no enforcement may be had in this district.

It appears that the interpretation of the venue provision in the National Traffic and Motor Vehicle Safety Act, as amended, is a matter of first impression. However, as both parties in this proceeding have indicated, the venue provision in 15 U.S.C. § 1401(c)(4) is exactly the same as that found in section 9 of the Federal Trade Commission Act, 15 U.S.C. § 49. The court may, therefore, look to cases interpreting section 49 for guidance in the case at hand.

Among the factors which this court may consider in determining the propriety of a particular venue under these sections are the convenience of NHTSA, the location of documents and witnesses, and the location of respondent's corporate headquarters. F. T. C. v. MacArthur, 532 F.2d 1135, 1140 (7th Cir. 1976). In any event, NHTSA's choice of a place of inquiry is "subject to the bound of reasonableness." Id. Accord, F. T. C. v. Cockrell, 431 F.Supp. 558, 559 (D.D.C.1977). This bound of reasonableness is a loose limitation, however. For example, in F. T. C. v. MacArthur, supra, a case on which respondents heavily rely, the Commission was conducting a non-public investigation into possibly deceptive trade practices committed by Bankers Life and Casualty Co. with regard to the sale of a subdivision in Colorado. The commission's office in Kansas City, Missouri issued a subpoena requiring one of Bankers Life's officers to testify. Return of the subpoena was set in Chicago, wherein was located Bankers Life's corporate headquarters. By agreement, return was transferred to Florida. When the subpoenaed officer refused to supply certain information at the Florida meeting, the F.T.C. sought enforcement of the subpoena in the Northern District of Illinois. The district court held, and the Seventh Circuit affirmed, that since the hearing was originally scheduled for Chicago, and since Bankers Life's corporate headquarters and supporting documentation were located in Chicago, it was not beyond the bound of reasonableness to conclude that the Northern District of Illinois was a district within the jurisdiction of which an inquiry was taking place. 532 F.2d at 1138-40.

This liberal construction of the bound of reasonableness has been adopted in this Circuit. In F. T. C. v. Browning, 140 U.S.App.D.C. 292, 435 F.2d 96 (1970), the court found that the District of Columbia was a place in which an inquiry was being carried on when the F.T.C. was investigating antitrust violations in the acquisition of concrete firms in three different states. In F. T. C. v. Cockrell, 431 F.Supp. 558, 559 (D.D.C.1977), the court held that when the agency's investigation was not concerned with respondent's actions within a specific, localized area, but rather was nationwide in scope, then it did not exceed the bounds of reasonableness to hold that the District of Columbia was a place in which the inquiry was being carried on.

Application of this liberal view of the venue requirement is eminently justified in the case now before the court. Congress intended that the Secretary of Transportation, and by delegation NHTSA, should have broad investigative power so as to insure highway traffic safety. H.Rep.93-1191, 93rd Cong., 2d Sess., As reprinted in (1974) U.S.Code Cong. & Admin.News pp. 6046, 6070-71. It would be contrary to this intent, and contrary to reason, to circumscribe NHTSA's enforcement powers in the way Firestone has suggested. This is especially true when the focus of NHTSA's investigation is a corporation as large as Firestone. Although Firestone's corporate headquarters are located in Akron, its tire manufacturing facilities are scattered at numerous sites across the nation. Firestone tires are sold and used in every state, and Firestone also manufactures tires for sale under the trademarks of other companies and distributors. NHTSA's concern is not with the activities of Firestone within the Northern District of Ohio, but with the safety of all Firestone tires in the country. As such, given the broad nature of NHTSA's concern in this case, this would appear to qualify as a nationwide inquiry within the meaning of F. T. C. v. Cockrell, supra. Therefore, since this investigation is directed from Washington, D.C., it does not exceed the bounds of reasonableness to find that the District of Columbia is a place within which this inquiry is being carried on.
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This is not, of course, to say that venue might not also be proper in the Northern District of Ohio. The fact that part of an investigation is carried on within one district does not preclude the possibility that another part may take place in another district, thereby qualifying both as proper venues for enforcement actions. F. T. C. v. MacArthur, supra, 532 F.2d at 1140. In the exercise of its statutory mandate to act to protect public traffic safety, NHTSA must be allowed to carry on wide-ranging investigations. This necessarily means that a number of venues at any one time would be proper for enforcement proceedings. To find otherwise would be to hamper the broad investigatory powers Congress intended NHTSA to have. It is, therefore, apparent that venue in this district is proper and respondent's first argument must be rejected.

B. Transfer to the Northern District of Ohio.

As an alternative to dismissing this case for improper venue, respondent urges this court to transfer this proceeding to the Northern District of Ohio pursuant to 28 U.S.C. § 1404(a), which states:

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For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or ...

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